Private goods - What are they? characteristics, examples, and more

Private goods

Assets are owned by private individuals or organizations.

What are private goods?

Private goods are those goods whose property does not belong to the State, but to private persons or organizations, and whose main purpose is to satisfy particular needs. These assets usually require a previously established monetary contribution to access them.

The organization or person who owns these private goods has the power to dispose of them, at their convenience; therefore, the owner can make use of this asset in a totally exclusive way, or even offer it in exchange for an economic contribution if he so wishes.

Private assets are part of people's assets because they make up the set of assets over which they legitimately own.

Characteristics of private goods

The main characteristics of private goods are the following:

• They are privately owned.
• Their owner can dispose of them at his convenience.
• Its use is not public.
• They present rival consumption.
• They present exclusion.
• They can be traded.
• Generally, its consumption requires a certain economic contribution.
• They have exclusivity generally granted by a previous economic contribution.

Private goods provided by the State

Private goods supplied by the State are those goods whose marginal cost is higher because they are supplied to a greater number of individuals. In other words, they are those goods supplied whose production cost rises when they are supplied to a greater number of people.

An example of these goods is water since it corresponds to a private supplied good, but it has a marginal cost because it has a cost to purify, transport, and supply it from one specific point to another. Likewise, education is another example of a private good provided by the State.

Examples of private goods

Here are some examples of private property:

• A house.
• A T-shirt.
• A car.
• A bed.
• A carbonated drink.
• A bicycle.
• A TV.
• A private organization.
• A motorcycle.

 

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